Wednesday, January 28, 2015

Economists may teach that low prices and declining demand encourage producers to decrease supply, but the iron ore industry appears to have skipped class that day."The combination of a further increase in global iron ore supply this year and only subdued demand growth suggests iron ore prices will continue to drift lower," said Caroline Bain, an analyst at Capital Economics, in a note Monday. She forecasts iron ore prices at $60 a tonne by year-end, with risks to the downside. Iron ore touched a more than five-year low Monday of around $63.30 a tonne, although some forward contracts are already pricing it under $60.

Output has picked up over the past few years, encouraged by expectations China demand would continue to post strong growth and by low production costs in Australia and Brazil, she said. She noted Rio Tinto and BHP Billiton put their average production cost in Pilbara, where most of Australia's iron-ore production is located, at around $25 a tonne, compared with 2010-13 average market prices at $145 a tonne. Even at current prices, these producers are still profitable, Bain noted. Australia is the world's second-largest iron-ore producer after China.

Despite 2014's around 50 percent decline in iron ore prices, the big four producers -- Vale (Sao Paulo Stock Exchange: VALE'A-BR), Rio Tinto, BHP Billiton and Fortescue (ASX:FMG-AU) - continue to expand production and other companies are also bringing projects on line this year, she said, forecasting Australian production will rise 6 percent this year, although that's down from 2014's 20 percent rise.

Don't count on China

At the same time, despite China producers' higher costs and lower ore grades, production there isn't likely to see much slowdown, especially as many steel plants have "vertically integrated" operations, owning mines nearby, Bain said. Closures on the mainland are likely to focus on less efficient operations, leading to a leaner and meaner industry there, she said.

"The multinational producers will be only partially successful in their bid to oust higher-cost producers globally and oversupply will continue to weigh on prices," she said. At the same time, China's iron ore usage will stagnate at best, hit by a combination of high inventories and lower demand to use the metal as part of financing deals, she said.

Goldman Sachs also expects iron ore producers won't be able to count on China for growth, noting it's become a mature market.

"The decade-long love affair between China and iron ore is cooling. Chinese steel consumption has increased to unsustainable levels and is bound to decline," it said in a note Friday. "Significant overinvestment to date will ensure that the market is well supplied."

It expects a "long war of attrition" will be needed to balance the market, cutting its long-term price forecast by 25 percent to $60 a tonne.

The Oil Effect

Falling oil prices are also set to weigh on iron ore prices, as they result in "substantial cost reductions", and commodity prices are likely to fall to meet these new lower levels, Citigroup said in a note Monday.

"Falling prices increase the real cost of debt repayments and could see increased defaults. This not only affects direct commodity demand, but also drives lower inventories and threatens commodity financing trade," it said, noting that falling commodity prices also leave companies with little incentive to build up inventories.

In a note earlier this month, the bank cut its 2015 iron ore price forecast to $58 a tonne from $65

Sunday, January 18, 2015

Spreading Debt and Death is the second coin in the "Rise and Fall of the Banksters" sub-series in the Silver Shield Series.

This design tackles a reality familiar to any student of history. The power of war is not the destruction it causes or the armies it raises but rather the debt it creates. By pushing and creating the conditions for one, banksters are able to create and control through the other. The Spreading Debt and Death Bankster round captures this idea perfectly.

The obverse features a design by Heidi Wastweet that shows a skeletonized tycoon in a top hat, a merchant of death as it were, and the wares that he peddles. By creating war as illustrated by the machine gun in his left, the bankster is able to create debt and servitude as illustrated by the shackles in his left hand.

The money trailing behind him is the vehicle used to bring about the "heyday" of the bankster's power as illustrated by the "prancing" attitude and smile that are both clearly visible. He is surrounded by the engraved words "Spreading Debt and Death".

ABOUT THE DESIGN

2014 is the 75th Anniversary of BATMAN, and to commemorate the event, the Island of Niue has authorized a series of legal tender, precious metal collectible coins featuring the Caped Crusader.

Whatever you know him as, wherever you know him from - the blockbuster movies, TV shows, video games, cartoons, or millions of comics - BATMAN is proof you don’t need superpowers to be a DC SUPER HERO.

REVERSE DESIGN

Each coin features Batman in action, engraved against a polished background.

OBVERSE DESIGN

Each coin features the Ian Rank-Broadley effigy of Her Majesty Queen Elizabeth II.

BONUS FEATURES

Each spectacular design comes in a Collectible limited edition 4-color tin and a line-up of one-of-a-kind bonus features including:

A Collectible cloisonne pin for 75 Years of Batman

A Collectible laser etched metal, sequentially numbered Certificate of Authenticity for each coin, including a facsimile signature of FRANK MILLER

An AR Gameboard

Augmented Reality App for mobile devices and tablets that launches from the coin - see an animated 3-D image of Batman and take a "selfie" with Batman!